Thanks guys for your suggestions.
In the past, I remember running a sql script file on the same folder as the powershell script itself, and getting an error if I did not specify the full path of the sql script.
I tried it now and it is working without having to include the full path...
I will post here if I see this happen again.
In any case, thanks again!
$instance = "srvr\instName"
sqlcmd `-S $instance `-i someScript.sql
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